Exam 21: Flexible Budgets and Standard Costs

Identify and explain the primary differences between fixed and flexible budgets.

Summerlin Company budgeted 4,000 pounds of material costing $5.00 per pound to produce 2,000 units.The company actually used 4,500 pounds that cost $5.10 per pound to produce 2,000 units.What is the direct materials price variance?

Claremont Company sells refurbished copiers.During the month,the company sold 180 copiers for total sales of $540,000.The budget for the month was to sell 175 copiers at an average price of $3,200.The sales price variance for the month was:

A variable or flexible budget is so named because it only focuses on variable costs.

Gala Enterprises reports the following information regarding the production on one of its products for the month.Compute the total direct labor cost variance,the direct labor rate variance,the direct labor efficiency variance and identify each as either favorable or unfavorable.

A company uses the following standard costs to produce a single unit of output. During the latest month,the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output.Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked.Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. -Based on this information,the direct materials price variance for the month was:

Seafarer Company established a standard direct materials cost of 1.5 gallons at $2 per gallon for one unit of its product.During the past month,actual production was 6,500 units.The material quantity variance was $700 favorable and the material price variance was $470 unfavorable.The entry to charge Work in Process Inventory for the standard material costs during the month and to record the direct material variances in the accounts would include all of the following except:

Tiger,Inc.budgeted the following overhead costs for the current year assuming operations at 80% of capacity,or 40,000 units: The standard cost per unit when operating at this same 80% capacity level is: The actual production achieved in the current year was 60% of capacity,or 30,000 units.The actual costs were: Calculate the following variances and indicate whether each is favorable or unfavorable.

The variable overhead spending variance,the fixed overhead spending variance,and the variable overhead efficiency variance can be combined to find the:

In the analysis of variances,management commonly focuses on four categories of production costs: ________ cost,________ cost; ________ cost; and ________ cost.

Briefly describe management by exception.

A direct labor cost variance can be divided into price and quantity variances,which are almost always called controllable and volume variances.

In producing 700 units of product last period,Azure Company used 5,000 pounds of Material K,costing $34,250.The company has established the standard of using 7.2 pounds of Material K per unit of product,at a price of $7.50 per pound.Calculate the materials price and quantity variances associated with producing the 700 units,and indicate whether they are favorable or unfavorable:

The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound.In manufacturing 8,000 units,47,000 pounds of material were used at a cost of $51 per pound.What is the total direct materials cost variance?

A company's flexible budget for 12,000 units of production showed total contribution margin of $24,000 and fixed costs,$16,000.The operating income expected if the company produces and sells 15,000 units is:

A ________ contains relevant information that compares actual results to planned activities.

Claymore Corp.has the following information about its standards and production activity for September.The controllable variance is:

LJ Co.produces picture frames.It takes 3 hours of direct labor to produce a frame.LJ's standard labor cost is $11.00 per hour.During March,LJ produced 4,000 frames and used 12,400 hours at a total cost of $133,920.What is LJ's labor rate variance for March?

Which department is often responsible for the direct materials price variance?

Levelor Company's flexible budget shows $10,710 of overhead at 75% of capacity,which was the operating level achieved during May.However,the company applied overhead to production during May at a rate of $2.00 per direct labor hour based on a budgeted operating level of 6,120 direct labor hours (90% of capacity).If overhead actually incurred was $11,183 during May,the controllable variance for the month was: